Keep Home in Bankruptcy
After yesterday’s post about rebuilding credit after bankruptcy, I got two different questions about how to keep your home during bankruptcy. One of the readers seemed a bit frustrated and finished by asking, “Why can’t I get a simple answer to this question: Can I keep my home if I file bankruptcy?” The simple answer is: Yes, you can keep your home if you file bankruptcy, but only if you do the right things. I suspect it is that, but only if, part that is causing the answer to not seem simple, so let’s break it down. Keeping Your House After Filing Bankruptcy First, it is important to understand that a home mortgage is a secured loan. The security, or collateral, for the loan is the home. If the debt is not repaid, then the lender may take the collateral and sell it in order to pay off the loan. Now, just like any other debt, a mortgage can be discharged in bankruptcy. Doing so means that the lender may no longer attempt to collect the debt. So far, so good. However, the lien, or the right to take possession of the loan’s collateral is NOT discharged, or affected in …